Amid the aggravating banking crisis in Europe, oil made a sharp downward spurt on Friday, which was also promptly bought out by evening. The main concern of investors is related to the largest banks in Europe Deutsche Bank and UBS Group. Traders fear that serious problems in the sector haven’t yet been resolved since the financial crisis of 2008.
According to Standard Chartered analysts, the slump in black gold prices was caused by an increase in hedging operations. Sales of crude oil on the market became very intensive to transfer the received funds further into precious metals. Concerns related to the continuation of the banking crisis remain among investors. This contributes to the growth of bearish sentiment in the fossil fuel market.
Sales in the oil market can resume at any time. Therefore, the external background is formed for the opening of short positions in oil in the near term.
Leading oil traders, investment, and hedge funds expect a recovery in oil prices and their growth in the summer, and the second half of the year. Removal of anti-COVID restrictions in China and the driving season will contribute to this. Gunvor Group CEO Torbjörn Törnqvist said at the FT Commodities Global Summit that rising demand for oil in Beijing will compensate for weak consumption in other countries.
Globally, prices are likely to rise. However, current problems may put pressure on black gold right now, unnerving investors who are betting on the growth of quotes.
According to technical analysis, oil is moving in a broad uptrend on the hourly timeframe. Today, the active recovery of oil continues. The 200-hour Moving Average and flat near $76 will be resistance for further growth. Currently, it is better to open short positions in oil because the price will aim to the lower border of the trend near $73.5. We will place a stop-loss when the previously mentioned resistance levels are broken through. This corresponds to a price of $76.5.
Decrease in Brent oil:
Take profit — 73.5
Stop-loss — 76.5
This content is for informational purposes only and is not intended to be investing advice.